Court Dismisses Fraud Claims in QuickBooks Case
A Michigan court granted summary disposition to Penn Company LLC against Dinesh Nayak, MD, PC in a dispute over $71,000 in fraudulent payments.
Updated on Nov. 5, 2026 in Financial Crime
A Michigan court granted summary disposition for Penn Company LLC on Dinesh Nayak, MD, PC's claims of breach of contract, breach of fiduciary duties, and negligence. The suit arose from unauthorized payments exceeding $71,000 made to fraudulent vendors through a compromised login in the plaintiff's QuickBooks Online account.
Why it matters
The ruling found the plaintiff's evidence insufficient to create a genuine factual dispute on breach or causation, a result that shapes how liability is assigned when client accounts are compromised through third-party credentials. For businesses relying on outside accounting firms, it underscores the importance of clearly defined security responsibilities.
The Michigan court granted summary disposition on the breach of contract, breach of fiduciary duties, and negligence claims, ending those claims at this stage. The source does not indicate whether the plaintiff has appealed or whether other claims, including failure to maintain cyber security and failure to notify of breach, remain pending.
The players
Penn Company LLC
An accounting services firm that provided QuickBooks Online bookkeeping to the plaintiff and was granted summary disposition in the Michigan case.
Dinesh Nayak, MD, PC
A medical practice that sued Penn Company LLC after unauthorized payments were made from its QuickBooks Online account.
The details
Penn Company LLC provided accounting services to Dinesh Nayak, MD, PC through QuickBooks Online, and became aware of fraudulent activity in the client account on September 19, 2024. The parties do not dispute that unauthorized transactions occurred or that the account of defendant employee Rebecca Marchyok was compromised.
Timeline
September 19, 2024: Penn Company LLC became aware of fraudulent activity in the plaintiff's QuickBooks account.
November 5, 2026: Reporting on the court's summary disposition ruling was published.
Legal Context
The ruling applies Michigan's summary disposition procedure, under which courts grant judgment when no genuine issue of material fact exists, to a dispute over compromised accounting credentials. It reflects how Michigan courts weigh affidavits and testimony when plaintiffs allege negligence in digital financial account security.
Businesses that outsource bookkeeping should review how their accounting providers secure login credentials and who bears responsibility when unauthorized transactions occur. Clients may want to confirm whether their contracts specify notification duties and cyber security standards before a breach happens.
The takeaway
Clear contractual terms on security duties and breach notification can determine liability when outside vendors control sensitive financial systems. Businesses should document those responsibilities before problems arise.
Further reading
Explore more Financial Crime coverage from across Michigan.
Source note: This article includes information reported by Michigan Lawyers Weekly.
